When you open your mailbox and receive an audit notice letter from the IRS, you may feel like the world is ending. However, you may have to understand what the audit is and what an IRS audit really means. Is your problem serious enough to hire a lawyer? You could be asking yourself this IRS audit lawyer hire question. Not all audits mean you need representation from legal counsel. However, there are certain situations of audits where a lawyer may be an option you need to really think about.
When You May Not Need a Lawyer
You probably won't need a lawyer for low-stakes audits with minor issues like missing documentation. If it's something simple, like just providing receipts, bank statements, or correcting some numbers, a lot of people handle it themselves with a CPA. Audits where nothing fishy is going on and the amounts are just low dollars is a classic example of this scenario.
When Hiring a Lawyer Is a Good Idea
If your audit covers several years of dubious activity involving a significant sum of money, hiring a tax attorney is a must. More so, if the IRS questions your reported income, deductions, or even thinks about fraud. You need a lawyer to safeguard your rights, and to ensure that you won't accidentally give damaging information to the IRS.
Benefits of Having a Tax Lawyer
When you hire a lawyer, you enjoy the benefits of attorney-client privilege, meaning you can communicate with your lawyer about your case without concern that your communications can be disclosed to a third party. In addition, taxes lawyers know how to navigate the IRS, and how to negotiate to get a reduction of penalties, interest, and/or even an additional tax assessment. If the audit is worse and goes to an appeal or court case, a lawyer can advocate for you for the entire process.
Special Considerations for Business Owners
Those running small businesses and self-employed folks have a greater chance of facing an audit due to their complex reporting requirements. A tax attorney can handle IRS correspondence and keep interruptions to a minimum while managing the audit so that it stays within reasonable limits.
Facing an IRS audit? Don’t navigate it alone. Talk to a qualified IRS audit attorney today to understand your options, protect your rights, and reduce potential penalties before the audit escalates.
